microfinance as a tool for poverty alleviation presentation : dr shabbir hussain
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Microfinance as a Tool for Poverty Alleviation Presentation : Dr Shabbir Hussain
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DELIVERY MECHANISM
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There are multiple models of delivery based upon the integration level of supply chainNGOsSpecialized BanksPromotion of MED, training & helping linkage with banksV/WOsNGOsSpecialized BanksPromotion of MED, training & providing Credit SupportV/WOsSpecialized BanksPromotion of MED, training & providing Credit SupportV/WOsNGOs as SHPIsThree- Pronged ApproachNGOs as Financial Intermediaries
Banks as SHPIs
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There are multiple delivery approaches ranging from credit only to a fully integrated portfolio of servicesIntegratedApproach
MinimalistApproach
Credit Only
Financial & Non Financial
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CBO based lending promotes independence because of lack of dependency on external donors Donor FundingCommunity Based Funding
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The effectiveness of various approaches varies across different levels of povertyAt the Poverty LineBelow the Poverty LineAbject PoorSafety NetLivelihoodGrowthM E DConsumption CreditI G A s
Classification Objective Approaches
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Strengths of Government and NGO ProgrammesGovernment Programs
Wide coverage is possible if resources allowInstitutional Mechanism provides clarity of roles and proceduresDirect access and support from Public resourcesLegal Framework of Transparency & AccountabilityLong-term sustainability of systemNGO Programs
Grassroots linkages and commitment of field staff to know and solve problemsNon hierarchical culture in their program. Suggestions welcome from their field staff and decisions taken at field levelMore concentration due to limited activities and area specific approachIndigenous copying mechanism of the community problems with better perceptions
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MFIs in PakistanAn Analysis of Current Realities
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Only about 5% of the poor in need of micro credit is currently coveredGap between borrowers reached and persons in need
Chart2
51559
196000
6300000
# of Borrowers
Data
Poverty Head-Count During The 1990s By Province & Region
Province92-9393-9496-9798-99
Urban17.71%13.58%12.44%19.13%
Punjab19.13%15.21%12.84%21.71%
Sindh14.35%9.69%8.96%14.03%
NWFP21.65%22.40%23.35%23.85%
Balochistan24.85%13.50%19.46%20.39%
Rural23.91%29.72%25.98%31.95%
Punjab22.69%29.34%23.72%31.41%
Sindh23.54%25.92%16.74%30.45%
NWFP28.80%34.22%37.07%40.56%
Balochistan22.92%32.83%36.27%19.42%
Overall22.15%24.95%21.82%28.19%
Punjab21.71%25.44%20.61%28.62%
Sindh19.47%18.12%12.76%23.33%
NWFP27.92%32.53%35.18%38.10%
Balochistan23.16%30.66%32.75%19.54%
Poverty Under Calorie Based Approach: Head Count Ratio
86-8787-8890-9192-9393-9496-9798-9900-01
National26.90%26.40%23.30%22.20%23.00%21.30%23.20%30.00%
Rural29.40%29.90%26.20%23.90%29.70%26.20%32.00%34.00%
Urban24.30%22.70%13.00%17.70%13.60%12.40%19.10%20.30%
Poverty Head-Count During The 1990s for the Provinces
Punjab92-9393-9496-9798-99
Urban19.13%15.21%12.84%21.71%
Rural22.69%29.34%23.72%31.41%
Overall21.71%25.44%20.61%28.62%
Sindh92-9393-9496-9798-99
Urban14.35%9.69%8.96%14.03%
Rural23.54%25.92%16.74%30.45%
Overall19.47%18.12%12.76%23.33%
Baluchistan92-9393-9496-9798-99
Urban24.85%13.50%19.46%20.39%
Rural22.92%32.83%36.27%19.42%
Overall23.16%30.66%32.75%19.54%
NWFP92-9393-9496-9798-99
Urban21.65%22.40%23.35%23.85%
Rural28.80%34.22%37.07%40.56%
Overall27.92%32.53%35.18%38.10%
Overall Trend in Poverty by Province
92-9393-9496-9798-99
Punjab21.71%25.44%20.61%28.62%
Sindh19.47%18.12%12.76%23.33%
Baluchistan23.16%30.66%32.75%19.54%
NWFP27.92%32.53%35.18%38.10%
Micro-Credit Disbursment
KashfSAFWCOSungiOPPTaraqeeDAMENTRDPSRSPAKRSPTotal
Number of Borrowers50887118537424603238277336112170543366
Number of New Borrowers315854633121192238548217425608193
Total Borrowers824612524867545795476332157852426551559
Micro-Credit Disbursment
KashfSAFWCOSungiOPPTaraqeeDAMENTRDPSRSPAKRSPTotal
Total Borrowers824612524867545795476332157852426551559
Total Borrowers reached by MFG-PEstimated total borrowers reached by all MFI'sEstimated total persons in need of Micro Credit
515591960006300000112000
280000
196000
Provincial Graphs
Provincial Graphs
0.19130.22690.2171
0.15210.29340.2544
0.12840.23720.2061
0.21710.31410.2862
Urban
Rural
Overall
Year
% of Population
Poverty Headcount for PUNJAB
National
0.14350.23540.1947
0.09690.25920.1812
0.08960.16740.1276
0.14030.30450.2333
Urban
Rural
Overall
Year
% of Population
Poverty Headcount for SINDH
# of Borrowers
0.24850.22920.2316
0.1350.32830.3066
0.19460.36270.3275
0.20390.19420.1954
Urban
Rural
Overall
Year
% of Popluation
Poverty Headcount for Baluchistan
0.21650.2880.2792
0.2240.34220.3253
0.23350.37070.3518
0.23850.40560.381
Urban
Rural
Overall
Year
% of Poulation
Poverty Headcount for NWFP
0.21710.19470.23160.2792
0.25440.18120.30660.3253
0.20610.12760.32750.3518
0.28620.23330.19540.381
Punjab
Sindh
Baluchistan
NWFP
Year
% of Poverty
Overall Trend in Poverty by Province
0.2690.2940.243
0.2640.2990.227
0.2330.2620.13
0.2220.2390.177
0.230.2970.136
0.2130.2620.124
0.2320.320.191
0.30.340.203
National
Rural
Urban
Year
% of Population
Poverty Headcount at the National Level
0.2690.2940.243
0.2640.2990.227
0.2330.2620.13
0.2220.2390.177
0.230.2970.136
0.2130.2620.124
0.2320.320.191
0.30.340.203
National
Rural
Urban
Year
% of Population
8246
125
2486
7545
795
476
3321
5785
24265
MFG-P Institutions
# of Borrowers
Number of Borrowers Within The Micro Finance Group Members
51559
196000
6300000
# of Borrowers
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Roughly 80% of the current borrowing is from the non-formal sectorHowever, the cost of borrowing from the non-formal sector is 4% higher
Chart3
22
78
Borrowings by sources
Sheet1
Total borrowings by Source (%)
Formal22
Non Formal78
Sheet1
Borrowings by sources
Sheet2
Sopurces of Funds (%)
Interest rate
Formal18.8
Non Formal22.8
Sheet2
Interest rate
Interest Rate
Interest Rates of Formal versus Non Formal
Sheet5
Outreach of major NGOs (June 1999)
BorrowersOuts.AmountAvg.L Size
AKRSP3637243.366899
SRSC100861.861310
PRSP10390102.69877
NRSP42397568.413407
Kashf8032.22740
Safco5881.52520
Sungi6633.55207
OPP141426.818934
SPO5005.511000
Sheet5
Borrowers
Major sources of Microcredit (No. of Borrowers)
Sheet4
Borrowers
Outs.Amount
Avg.L Size
Outreach of Major NGOs
Sheet3
Major Soureces of Microcredit
BorrowersAvg. Loan SizeOutstanding
Banks134194287105614.7
NGOs61400165401015.5
Sheet3
0
0
Borrowers
Sources of Microcredit (No. of Borrowers)
00
00
Banks
NGOs
Sources of Microcredit
Informal Lenders
Commission Agents11.6
Money Lenders35.8
Shopkeepers14.5
Input Dealerds21
Feed Dealers11.3
Others2.4
0
0
0
0
0
0
Informal Lenders
Chart4
18.8
22.8
Interest rate
Interest Rate
Interest Rates (in %) Formal vs. Non Formal
Sheet1
Total borrowings by Source (%)
Formal22
Non Formal78
Sheet1
Borrowings by sources
Sheet2
Sopurces of Funds (%)
Interest rate
Formal18.8
Non Formal22.8
Sheet2
Interest rate
Interest Rate
Interest Rates (in %) Formal vs. Non Formal
Sheet5
Outreach of major NGOs (June 1999)
BorrowersOuts.AmountAvg.L Size
AKRSP3637243.366899
SRSC100861.861310
PRSP10390102.69877
NRSP42397568.413407
Kashf8032.22740
Safco5881.52520
Sungi6633.55207
OPP141426.818934
SPO5005.511000
Sheet5
Borrowers
Major sources of Microcredit (No. of Borrowers)
Sheet4
Borrowers
Outs.Amount
Avg.L Size
Outreach of Major NGOs
Sheet3
Major Soureces of Microcredit
BorrowersAvg. Loan SizeOutstanding
Banks134194287105614.7
NGOs61400165401015.5
Sheet3
0
0
Borrowers
Sources of Microcredit (No. of Borrowers)
00
00
Banks
NGOs
Sources of Microcredit
Informal Lenders
Commission Agents11.6
Money Lenders35.8
Shopkeepers14.5
Input Dealerds21
Feed Dealers11.3
Others2.4
0
0
0
0
0
0
Informal Lenders
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Approximately 60% of the non-institutional lending is through money lenders, Shopkeepers, and agriculture input dealers
Chart1
11.6
35.8
14.5
21
11.3
2.4
c
Informal Lenders
Agra Input Dealerds22%
Shopkeeper15%
Sheet1
Total borrowings by Source (%)
Institutional22
Non Institutional78
Sheet1
Borrowings by sources
Sheet2
Sopurces of Funds (%)
Interest rate
Institutional18.8
Non Institutional22.8
Sheet2
Interest Rates in percent (Institutional vs non institutional)
Sheet5
Outreach of major NGOs (June 1999)
BorrowersOuts.AmountAvg.L Size
AKRSP3637243.366899
SRSC100861.861310
PRSP10390102.69877
NRSP42397568.413407
Kashf8032.22740
Safco5881.52520
Sungi6633.55207
OPP141426.818934
SPO5005.511000
Sheet5
Borrowers
Major sources of Microcredit (No. of Borrowers)
Sheet4
Borrowers
Outs.Amount
Avg.L Size
Outreach of Major NGOs
Sheet3
Major Soureces of Microcredit
BorrowersAvg. Loan SizeOutstanding
Banks134194287105614.7
NGOs61400165401015.5
Sheet3
Borrowers
Sources of Microcredit (No. of Borrowers)
Banks
NGOs
Sources of Microcredit
Informal Lenders
Commission Agents11.6
Money Lenders35.8
Shopkeepers14.5
Input Dealerds21
Feed Dealers11.3
Others2.4
c
Informal Lenders
Shopkeeper15%
Agra Input Dealerds22%
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AKRSP,SRSP and OPP have attained Financial Self-sufficiency Operating efficiency is more in SRSP and TRDPSource : Compiled/synthesised from Microfinance Group (2001) [1] Financial Self Sufficiency ratio indicates the extent to which revenue earned covers operating costs loan losses as well as maintaining the value of net worth in relation to inflation. Unless 100 % financial self sufficiency is reached, the long term provision of cre4dit services is undermined by the impact of inflation and the continued necessity to rely on new donor funds.
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Comparison of Existing Micro-Finance ModelsCredit Credit Plus
Sheet1
Comparison of Existing Micro-Finance Models
(Community based economic empowerment)
Criteria/FeaturesMFIs (pure)RSPsCBOsFormal Sector
NCBsLeasing Corp.
(Private)
Major PlayersOPP Damen KashfNRSP PRSP SRSP AKRSPIndigenous organizationsmfi
ModelPass Admin Cost to borrower; market orientedWholistic; menu of servicesA variant of the Wholistic services offeredMandate; subsidized creditMarket orientedncb
Strategic Prioritysustainabilityoutreach and accessAdhoc*None, threat of penalty from SBPoperational focusleasing
A C C E S Scbos
Scope of CoverageUrban; peri-urban (limited locations)RuralRural/Urban (1-5 locations)RuralRural/Urban
Growth RateHighHighLow to noneLow (?)Med (?)
Nature of IGAsAlmost all agroAlmost all agro/ livestockNo Distinction between sectorsAll agroAgro & productive enterprise assets (e.g. - photocopy machine)
Gender SenseHighLowMixed
Lending Methodologysmall groupsvillage basedcommunity basedIndividualIndividual
OutreachMediumLargeLowLargeMed
Clientsworking poorpoorest of the poorpoorest of poorless poorsmall business
D E L I V E R Y
Servicecredit onlyCommunity Physical Infrastructure (CPI), credit, training, National Resource Management (NRM)one or two activitiescredit onlycredit only
Cost of DeliveryLowHighLowLowMedium
F I N A N C I N G
Interest RateHighLowVariessubsidizedVaries
Recovery Rate**Very HighHighMed-LowLowHigh
G O V E R N A N C E
DisclosureHighMedVery LowMedHigh
InspirationGrameenAKRSPNoneMandate of GOPVaries
main + access
Criteria/FeaturesMFIs (pure)CBOsRSPs
Leasing Corp.NCBs
(Private)
Major PlayersDamen KashfOrix LeasingFirst Women's, Bank of KhyberIndigenous organizationsNRSP PRSP SRSP AKRSPmfi
ModelLow subsidy, pass costs to borrowers; market orientedNo subsidy, private equipment, market orientedSubsidized line of credit, mandated disbursementLow subsidy, combination of credit & support servicesSubsidy, credit and holistic support servicesncb
Strategic PrioritySustainabilityOperational focusThreat of penalty from SBPAdhocWidespread accessleasing
A C C E S S
Scope of CoverageUrban; peri-urban (limited locations)RuralRural/UrbanRural/Urban (1-5 locations)Rural
Growth RateHighLow (?)Med (?)Low to noneHigh
Nature of IGAsAlmost all agroAll agroAgro & productive enterprise assets (e.g. - photocopy machine)No Distinction between sectorsAlmost all agro/ livestock
Gender SenseHighMixedLow
Lending Methodologysmall groupsIndividualIndividualcommunity basedvillage based
OutreachMediumLargeMedLowLarge
Clientsworking poorless poorsmall businesspoorest of poorpoorest of the poor
delivery finance governance
Criteria/FeaturesMFIs (pure)RSPsCBOsFormal Sector
NCBsLeasing Corp.
(Private)
Major PlayersOPP Damen KashfNRSP PRSP SRSP AKRSPIndigenous organizationsmfi
ModelPass Admin Cost to borrower; market orientedWholistic; menu of servicesA variant of the Wholistic services offeredMandate; subsidized creditMarket orientedncb
Strategic Prioritysustainabilityoutreach and accessAdhoc*None, threat of penalty from SBPoperational focusleasing
A C C E S S
Scope of CoverageUrban; peri-urban (limited locations)RuralRural/Urban (1-5 locations)RuralRural/Urban
Growth RateHighHighLow to noneLow (?)Med (?)
Nature of IGAsAlmost all agroAlmost all agro/ livestockNo Distinction between sectorsAll agroAgro & productive enterprise assets (e.g. - photocopy machine)
Gender SenseHighLowMixed
Lending Methodologysmall groupsvillage basedcommunity basedIndividualIndividual
OutreachMediumLargeLowLargeMed
Clientsworking poorpoorest of the poorpoorest of poorless poorsmall business
DELIVERY
Servicecredit onlyCommunity Physical Infrastructure (CPI), credit, training, National Resource Management (NRM)one or two activitiescredit onlycredit only
Cost of DeliveryLowHighLowLowMedium
FINANCING
Interest RateHighLowVariessubsidizedVaries
Recovery Rate**Very HighHighMed-LowLowHigh
GOVERNANCE
DisclosureHighMedVery LowMedHigh
InspirationGrameenAKRSPNoneMandate of GOPVaries
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Comparison of Existing Micro-Finance ModelsCredit Credit Plus
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Comparison of Existing Micro-Finance ModelsCredit Credit Plus
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